7. Loss on Long-Term Contract

During the second quarter of 2014, the Company updated its analysis of a long-term partner related contract. Based on the results of that analysis and an estimate of revenue to be generated in the future under the contract, the Company determined that sufficient revenue would not be generated under the contract for it to meet its minimum annual guarantees of revenue sharing to its partner.

As a result, the Company recorded a $6.2 million loss on the long-term contract at September 30, 2014, which represented the amount it expected that the total minimum annual guarantees payable to the partner would exceed the revenue generated under the contract at that time. The loss on the long-term contract was recorded as follows:

The Company continues to re-evaluate this loss contract status. During the first half of 2015, the Company reassessed its future revenue projections and operating costs for the remainder of the contract until it terminates on December 31, 2016.  Based on lower revenue and operating expense projections, the Company revised its loss contract estimates during the nine months ended September 30, 2015, which resulted in a net gain of $0.4 million. The Company evaluated its loss contract estimates during the three and nine months ended September 30, 2016, which resulted in no net change on the long-term contract.  At September 30, 2016, the remaining balance on the loss on long-term contract was $92 thousand.